Netherlands confirms it will restrict more ASML exports to China

The Dutch Cabinet confirmed on Wednesday that it is restricting exports regarding "very specific technologies in the semiconductor production cycle." The decision directly impacts the ability of Dutch tech giant ASML to export products to China without a specific export license. The company manufactures highly specialized and sought-after equipment used to produce computer chips.

News about a deal between the Netherlands, the United States and Japan to restrict exports of microchip technology to China already leaked out back in January. The Netherlands is now restricting the sale of deep ultraviolet systems lithography systems which print fine details on microchips. The Dutch government has already blocked the sale of ASML's extreme ultraviolet lithography systems for several years. Currently, ASML is the only known company in the world that produces systems that manufactures extreme ultraviolet lithography systems, which are a development on their deep ultraviolet systems.

ASML said in a statement that only their "most advanced" immersion lithography tools are affected by the export controls.

Ultimately, as the technology for making semiconductors continues to develop, so does its impact on national and international security, said Foreign Trade Minister Liesje Schreinemacher in a letter sent to the Tweede Kamer, the lower house of Dutch parliament. The measure is part of the framework the Cabinet was developing to control exports of semiconductor technology.

Schreinemacher stated that the goal is to "prevent Dutch goods from contributing to undesirable end use, such as military deployment or in weapons of mass destruction; prevent unwanted long-term strategic dependencies; and the maintenance of Dutch technological leadership." Applications for export licenses will be reviewed "on a case-by-case basis, based on these three principles."

Although ASML was not mentioned in the letter by name, Schreinemacher specifically singled out the need to protect technologies like deep ultraviolet lithography, the process used to make integrated circuits. "These technologies, in combination with certain other advanced technologies made elsewhere, play a vital role in the production of advanced semiconductors," Schreinemacher wrote.

"It goes without saying that the Netherlands also works closely with the business community in establishing national control measures. It is important for companies to know exactly where they stand and that they have time to adapt their business processes to new regulations."

ASML said they expect it will take some time for the regulation to be laid down in Dutch law. "Based on today’s announcement, our expectation of the Dutch government’s licensing policy, and the current market situation, we do not expect these measures to have a material effect on our financial outlook that we have published for 2023 or for our longer-term scenarios as announced during our Investor Day in November last year," the company said.

The Netherlands will also inform the European Commission and EU Member States about the measure so they can adopt similar restrictions. However, the technology that is restricted is only in use in a handful of countries worldwide.